China introduces scheme to protect thermal coal prices

Report summary

On 11 January, the NDRC announced a memo outlining measures it would take to reduce volatility in domestic thermal coal prices. The memo was signed by the NDRC and three major industry associations (namely, China National Coal Association, China Electricity Council, and China Iron and Steel Industry Association) on 29 December 2016. A detailed scheme of actions in response to spot coal price changes is set out in the memo. The NDRC has asked provincial development and reform commissions, pricing bureaus and relevant companies to adhere strictly to the new guidelines. In early December, when responding to coal producers' concerns of falling spot prices, a senior NDRC official said the government had set limits for spot coal prices. The official did not disclose further details regarding price levels and, as a result, rumours were sent flying. The release of the memo puts an end to the speculation.